GUIDANCE
Corporate Debt Securities
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SUGGESTED ROUTING |
KEY TOPICS |
Corporate Finance
Legal and Compliance
Operations
Senior Management
Technology
Trading and Market Making
Training |
Debt Securities
Dissemination of Transaction
Information
Operations
[Rule 6200] Series
TRACE Rules
Transaction Reporting |
Executive Summary
On December 28, 2005, the Securities and Exchange Commission
(SEC or Commission) approved amendments to [Rule 6250] of the
[Rule 6200] Series, also known as the Trade Reporting and Compliance
Engine (TRACE) rules.1 The amendments to [Rule 6250] provide that
information on all transactions in TRACE-eligible securities be
disseminated immediately upon receipt, except those transactions
in TRACE-eligible securities that are purchased or sold pursuant to
[Rule 144A] under the Securities Act of 1933 (Securities Act) ([Rule 144A]
transactions). [Rule 6250], as amended, is set forth in Attachment A.
The amendments become effective on January 9, 2006.
Questions/Further Information
Questions concerning this Notice should be directed to
[email protected]; Elliot Levine, Chief Counsel, Transparency
Services, Markets, Services and Information, at (202) 728-8405; or
Sharon K. Zackula, Associate General Counsel, Office of General
Counsel, Regulatory Policy and Oversight, at (202) 728-8985.
Discussion
Currently, NASD disseminates transaction information for secondary market transactions
in all TRACE-eligible securities immediately upon receipt of the transaction information,
except as detailed below.
• Information is disseminated on a delayed basis for the following TRACE-eligible
securities transactions:
• Newly Issued Securities Rated BBB or Lower. Transactions in newly issued BBB-rated TRACE-eligible securities that are executed during the first two business days after pricing are subject to a two-business day delay. See [Rule 6250](a)(1). Those in newly issued TRACE-eligible securities rated BB or lower are subject to a 10-business day delay. See [Rule 6250](a)(2).
• Non-Investment Grade Transactions Greater than $1 Million. Transactions that are greater than one million dollars (par value) in BB-rated TRACEeligible securities that trade on average less than one time per day are disseminated two business days from the time of execution. See [Rule 6250](b)(2)(A). Transactions that are greater than one million (par value) rated B or lower that trade on average less than one time per day are disseminated four business days from the time of execution. See [Rule 6250](b)(2)(B).
• Information is reported to TRACE but NOT disseminated on [Rule 144A] transactions in TRACE-eligible securities.
NASD has amended [Rule 6250] to eliminate all provisions for delayed dissemination
and provide that information on all transactions in TRACE-eligible securities, except
transactions executed pursuant to Rule 144A, be disseminated immediately.
• NASD will implement the amendments to
[Rule 6250] as follows:
• For members that execute and report transactions in TRACE-eligible
securities that are subject to dissemination delays under current
subparagraphs (a)(1) and (2) and (b)(2)(A) and (B) of [Rule 6250] prior to the
effective date of the amendments, NASD will look to the date that the
trade was executed and reported to determine the applicable dissemination
protocol. Information about these transactions will not be disseminated
until the period of delay has run (see Examples 1 and 2 below).
• For members that execute transactions in TRACE-eligible securities that are
subject to dissemination delays under [Rule 6250] as referenced above prior
to the effective date of the amendments, but report such transactions on or
after the effective date, NASD will look to the date that the transactions
were reported to determine the applicable dissemination protocol, with the
result that the information will be disseminated immediately upon receipt
(see Example 3 below).
The following are examples of how the implementation procedures will affect
dissemination. Note: NASD will make the proposed rule change effective at 12:00:01
a.m. E.T. on Monday, January 9, 2006.
• Example 1: On January 5, 2006, a member executes and reports a transaction
subject to a four-business day delay. Under the implementation
procedures, the transaction would be disseminated on Wednesday, January
11, 2006 with a "D" as/of indicator (showing that the trade took place at a
prior date and time) and with a time stamp (indicating the exact date and
time that the trade took place).
• Example 2: On January 5, 2006, a member executes and reports a
transaction in a newly issued TRACE-eligible security subject to a 10-business
day delay. Under the implementation procedures, the transaction would
be disseminated on Friday, January 20, 2006 with a "D" as/of indicator
(showing that the trade took place at a prior date and time) and with a
time stamp (indicating the exact date and time that the trade took place).
• Example 3: On January 6, 2006, a member executes a transaction in a
TRACE-eligible security subject to a four-business day delay. The member
reports the transaction on January 9, 2006. Under the implementation
procedures, the transaction would be disseminated immediately on
January 9, 2006 with a "Y" as/of indicator (showing that the trade took
place at a prior date and time) and with a time stamp (indicating the exact
date and time that the trade took place).
See Attachment A for the full text of the amendments to [Rule 6250].
Effective Date
The effective date of the amendments to [Rule 6250] is January 9, 2006.
1See Securities Exchange Act Release No. [53031]
(December 28, 2005), ___ Fed. Reg. ________
(January ___, 2006) (File No. SR-NASD-2005-120).
ATTACHMENT A
The text of [Rule 6250] is replaced in its entirety by the underlined rule text set forth below.
6250. Dissemination of Transaction Information
(a) Dissemination
NASD will disseminate information on all transactions in TRACE-eligible securities immediately upon receipt
of the transaction report, except as provided below.
(b) Rule 144A Securities
NASD will not disseminate information on a transaction in a TRACE-eligible security that is effected pursuant
to Rule 144A under the Securities Act of 1933.
